AutoZone 2014 Annual Report Download - page 125

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55
Significant components of the Company's deferred tax assets and liabilities were as follows:
(in thousands)
August 30,
2014
August 31,
2013
Deferred tax assets:
Net operating loss and credit carryforwards ................................................
.
$ 40,507
$ 41,785
Insurance reserves .......................................................................................
.
16,354
16,237
Accrued benefits ..........................................................................................
.
79,932
67,350
Pension ........................................................................................................
.
21,493
18,004
Other ............................................................................................................
.
43,078 45,597
Total deferred tax assets ...........................................................................
.
201,364
188,973
Less: Valuation allowances .....................................................................
.
(10,604) (11,593)
190,760
177,380
Deferred tax liabilities:
Property and equipment ...............................................................................
.
(59,016)
(84,512)
Inventory .....................................................................................................
.
(273,005)
(262,653)
Other ............................................................................................................
.
(36,785) (27,341)
Total deferred tax liabilities ....................................................................
.
(368,806) (374,506)
Net deferred tax liability .................................................................................
.
$ (178,046) $ (197,126)
Deferred taxes are not provided for temporary differences of approximately $345.0 million at August 30, 2014,
and $260.0 million at August 31, 2013, representing earnings of non-U.S. subsidiaries that are intended to be
permanently reinvested. Computation of the potential deferred tax liability associated with these undistributed
earnings and other basis differences is not practicable.
At August 30, 2014 and August 31, 2013, the Company had deferred tax assets of $11.2 million and $8.7 million,
respectively, from net operating loss (“NOL”) carryforwards available to reduce future taxable income totaling
approximately $87.6 million and $75.5 million, respectively. Certain NOLs have no expiration date and others
will expire, if not utilized, in various years from fiscal 2016 through 2033. At August 30, 2014 and August 31,
2013, the Company had deferred tax assets for income tax credit carryforwards of $29.3 million and $33.1
million, respectively. Certain income tax credit carryforwards have no expiration and others will expire, if not
utilized, in various years from fiscal 2015 through 2026.
At August 30, 2014 and August 31, 2013, the Company had a valuation allowance of $10.6 million and $11.6
million, respectively, on deferred tax assets associated with NOL and tax credit carryforwards for which
management has determined it is more likely than not that the deferred tax asset will not be realized. Management
believes it is more likely than not that the remaining deferred tax assets will be fully realized.
A reconciliation of the beginning and ending amount of unrecognized tax benefits is as follows:
(in thousands)
August 30,
2014
August 31,
2013
Beginning balance ...........................................................................................
.
$ 30,643
$ 27,715
Additions based on tax positions related to the current year .......................
.
7,857
7,015
Additions for tax positions of prior years ....................................................
.
2,114
2,758
Reductions for tax positions of prior years ..................................................
.
(1,355)
(470)
Reductions due to settlements .....................................................................
.
(2,074)
(3,019)
Reductions due to statute of limitations.......................................................
.
(4,057) (3,356)
Ending balance ................................................................................................
.
$ 33,128 $ 30,643
Included in the August 30, 2014 and the August 31, 2013 balances are $19.1 million and $20.1 million,
respectively, of unrecognized tax benefits that, if recognized, would reduce the Company’s effective tax rate.
10-K